Know Thy Customer
Microsoft Retail Speak Partner Guide 2010

Written by Marc Chriqui, President, and Melanie Tabet, Communications Manager

What makes one retailer successful while a similar one struggles? Why do customers gravitate towards certain stores and never frequent others? These are the dilemmas many retailers are attempting to solve as each of them strives towards the same goals – attaining customers’ attention and retaining their loyalty. Retailers know they need ‘it’; they simply aren’t sure what ‘it’ really is.

By uncovering why traditional customer relationship management (CRM) practices are no longer sufficient for attracting and retaining customers, it is becoming increasingly evident that intelligent CRM is the only way to keep up with a rapidly changing and crowded retail landscape. Using the feedback obtained through retail-specific analytics and reporting, intelligent CRM can be applied to driving branding, advertising and marketing actions, resulting in personalised, demographic-based messaging, discounts and overall shopping experiences.

Nothing is more critical to a retailer’s success and survival than its relationship with its customers. However, although 86 per cent of retailers believe that building deeper relationships with customers is key to their success, 46 per cent cite their company’s efforts towards customer centricity as basic. This means that despite recognising the importance of having a strong customer focus, retailers are uncertain how to implement and proceed with an effective CRM strategy.

Implementing a CRM solution that allows them to delve deeply into the why’s and how’s of customer buying patterns and behaviours will inevitably lead to overall benefits for the retailer, including increased sales, optimal profit margins, greater average mean basket, repeat store visits and new customer acquisition. But to truly paint an accurate picture of the customer, intelligent CRM must team multi-channel integration with demographic and even competitor information.

Suppose a retailer has been tracking 29-year-old Jane Smith’s buying patterns for a year and has discovered that she spends an average of US$100 a month on its e-commerce site and at the store, and that she is most responsive to two-for-one offerings. If this information is combined with demographic data stating that females between the ages of 25 and 35 have approximately US$500 of disposal income per month, it can be deduced that a customer fitting Jane Smith’s profile spends 20 per cent of her monthly disposable income shopping there. This leaves 80 per cent of her disposal income remaining. If the data also states that females in this age range are avid users of mobile devices and social media, the cumulative information would indicate that targeting this segment through these channels, while ensuring that any competitors’ two-for-one offerings are matched, would likely increase the frequency of their visits and even the average mean basket, allowing the retailer to profit from the remaining 80 per cent of disposable income.

With today’s vast digital coverage, retailers are constantly presented with new ways of reaching their target markets. E-mail, social media and text messaging present rapid and cost-effective ways of dispensing messages and improving brand visibility, helping customers identify with the retailer.

For example, by tracking responses to multichannel marketing efforts through digital widgets or applications on Facebook, iPhones, iGoogle and blogs, where customers can input a login or ID, promotions such as mobile coupons can be sent to customers instantaneously in response to their interest in a product. Configurable by customer, these widgets could be used by customers to create wish lists, ‘buy me this’ requests, and personalised product recommendations. Imagine the increased likelihood of a purchase being made in response to this type of messaging versus a traditional advertisement featured in a mass-distributed flyer that they may or may not ever receive.

An intelligent CRM solution incorporates the who, what, where, when and why of customer behaviour and converts it into suggestive marketing. Once the rules are established and plugged into the solution, data is inputted into the CRM and the solution cross-references it, producing substantiated suggestions on target markets, cross-selling, up-selling, campaigns, and appropriate channels for reaching customers, even automating these suggestions if the retailer so desires.

For an intelligent CRM solution to provide useful and effective information and execution, preconfigured, business-specific rules must be programmed into the system. These rules, which could be turned on or off, come from the solution vendor having scrutinised retail workflows, understood patterns, and developed directives based on both initial input and final results.

In addition to these preconfigured rules, the CRM solution vendor should act as a consultant to the retailer, working with them to analyse their business and expand the rules based on the company’s goals. Designed to accept human input, this rule-driven CRM could be adapted regularly as business needs grow and develop.

Fed by multiple data sets, including products searched, wish lists, registries and bestseller information, the CRM could be constructed to drive all cross-selling, up-selling and marketing activities across enterprise applications. No CRM solution is an island, and allowing it to integrate to multiple channels and applications ensures both the richness of the data collected and its proper dispersion throughout the enterprise.

With input constantly being supplied to the CRM, the retailer will be able to perform multi-dimensional analysis on the performance and effectiveness of their programs and on overall sales. Using these analytics, the retailer will uncover strategies to feed into future marketing campaigns. Also, they will be able to decipher which types of products people purchase simultaneously and bundle them together with a third or fourth complementary product suggested by the system, helping with in-store merchandising and product placement that would not be so evident without in-depth data mining and subsequent analytics.

As retailers struggle to differentiate themselves from their competition, truly understanding their customers and how to reach them is what will separate successful retailers from those who neglect to invest in fostering relationships. Those who view CRM as a ‘nice to have’ will suffer as their messages get lost among those that are truly reaching a captive audience.

The use of intelligent CRM simplifies the seemingly complex process of acquiring and making use of deep customer knowledge by automating tasks based on logic and analysis, thereby enriching the retailer’s connection to those most interested in its product. In an increasingly competitive and fragmented retail landscape, what could be smarter than that?

About the Authors
Marc Chriqui is an enthusiastic entrepreneur, software architect, marketer and customer service advocate. In 2007, Marc joined Raymark as the company’s CRM solutions manager, architecting CRM and business intelligence-driven retail applications. He became director of marketing and business development in 2008, prior to assuming his role as president in 2009.

Melanie Tabet has spent her career researching and writing about how retailers use software solutions to improve business processes and enhance the shopping experience. Melanie’s commerce and marketing background, along with her experience in the retail software industry, have allowed her to examine and document the significant impact of innovative retail technology on retailers’ financial, operational and customer relationship success.